Adaptive Portfolio Management

Adaptive Portfolio Management

 

The modern business environment is dynamic, ever changing, complex and is represented by the 4 letter acronym – VUCA

  • Volatility – is characterised by challenges that are unexpected or unstable and may be for an unknown duration. The nature and dynamics of change and the nature and speed of change is increasing by the day.
  • Uncertainty – is the lack of predictability, the prospects of surprise and a sense of awareness and understanding of issues and events. There is no clarity about future outcomes and how much ever steps we take in that direction, the goal posts keep moving away.
  • Complexity – is the multiplex of forces, the confounding of issues and the resulting confusion that surround an organization. The interactions are often unclear until after they have happened.
  • Ambiguity – is the haziness of reality, mixed meaning of conditions, confusion about cause and effect resulting in misinterpreting events, their consequences and causes.

The relevance of VUCA relates to how people view the conditions under which they make decisions, plan forward, foster change and solve problems.   Coupled with this,  is the modern reality which has become increasingly competitive, characterised by rapid innovation, radical transparency customer engagement.  Organizations are forced to anticipate issues that shape conditions, understand the consequences of issues and actions, prepare for alternative realities and challenges and address relevant opportunities.   As Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change” 

Why Adaptive Portfolio Management

Programs are designed to meet certain business goals and deriving decisions about portfolio items.  Portfolio Management is driven by dynamic business goals and is not a static year-long plan.  Agile Portfolio management uses feedback loops to constantly adjust and adapt to changing business needs.  It is taking the “Build Measure Learn” Cycle from the Lean Startup and apply it at all levels of  Portfolio Management – with organizations focussed on delivering value in small chunks, getting feedback, learn from it and improve on it.

Characteristics that need to be in place for organizations to have an Adaptive Portfolio

  1. Flow vs Batch – One of the benefits about using the flow based delivery model instead of a large batch product development is the ability to change direction easily – at every level from an individual to the portfolio.   This provides the ability to respond to churn in the marketplace and get fast feedback from the customers and improve on the product which can generate value to the customer.
  2. Governance – Unlike Governance in traditional projects, governance in Agile projects is about answering two questions –
    1. Are we getting value for money
    2. Do solutions delivered meet our full expectations

Governance should be light touch –to be an enabler of agility rather than being a burdensome process, slowing down the delivery of validated learning.  Governance is also about creating an environment of trust and empowerment.

  1. Iterative Flow – It is critical that every initiative should have regular checkpoints and feedback loops. The question to be asked is if the next incremental work is going to add more value than the cost of building the increment.  It is important to keep the iteration no longer than 6 weeks to have these feedback loops shorter.
  1. Understand our capacity – It is important to understand the constraints faced by the organization in terms of its capacity to deliver. It is good to know how big is the queue of new initiatives and whether we have the capacity to deliver the items in the queue.  It there are too many items in the queue, be decisive in pruning the queue ruthlessly.
  1. Understand the voice of the customer – This is about getting frequent feedback from the  customer, improve on your product / build – with the objective of delighting the customer.  An adaptive portfolio is a key characteristic of a truly learning organisation, one that listens and responds to the ever changing voice of their customer.  According to Peter Senge “the only sustainable source of competitive advantage is your organizations ability to grow faster than the competition”.
  1. Value Engineering – this is understanding both the value and the cost of the feature and make informed value engineering decisions during project execution – and adopt the portfolio to respond to validated learning.
  1. Agile PMO – Have an Agile PMO which is People oriented (sharing knowledge and facilitating organization wide learning about Agile approaches), Process Oriented (come out with process guidelines, tools and metrics) and Project Oriented (quick in decision making and managing the inflow of new projects and maintaining the WIP limit of the organization.  One cannot have an adaptive portfolio, if the delivery engine is not adaptive and responsive.

 

 

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